Q18E - Horngren'S Financial And Managerial Accounting

Question

Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.

Company A                                          Company B                                                Company C 

Cash \( 6                                               Wages Expense \) 12                            Administrative Expenses $ 4 

Net Sales Revenue 48                        Equipment 32                                      Cash 25 

Finished Goods Inventory 10          Accounts Receivable 8                        Net Sales Revenue 75 

Cost of Goods Sold 23                      Service Revenue 65                               Selling Expenses 8

 Selling Expenses 4                            Cash 34                                                  Merchandise Inventory 12 

 Equipment 67                                   Rent Expense 12                                   Equipment 55 

Work-in-Process Inventory 9                                                                          Accounts Receivable 19 

Accounts Receivable 14                                                                                   Cost of Goods Sold 25

Cost of Goods Manufactured 23 

Administrative Expenses 7 

Raw Materials Inventory 6

Using the data on the previous page, calculate total current assets for each company

Step-by-Step Solution

Answer

The total current assets of company A are $45, company B is $42 and company C is $56.

Step-by-Step Solution Step 1 : Company A

$$\begin{gathered} \mathbf{Total}\mathbf{ }\mathbf{Current}\mathbf{ }\mathbf{Assets}\mathbf{=}\mathbf{Accounts}\mathbf{ }\mathbf{Receivables}\mathbf{+}\mathbf{Cash}\mathbf{+}\mathbf{Finished}\mathbf{ }\mathbf{Goods}\mathbf{ }\mathbf{Inventory}\mathbf{+}\mathbf{Work}\mathbf{-}\mathbf{in}\mathbf{-}\mathbf{Process}\mathbf{ }\mathbf{Inventory}\mathbf{+}\mathbf{Raw}\mathbf{ }\mathbf{Material}\mathbf{ }\mathbf{Inventory} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{14}\mathbf{+}\mathbf{6}\mathbf{+}\mathbf{10}\mathbf{+}\mathbf{9}\mathbf{+}\mathbf{6} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{45} \end{gathered}$$

Step 2 Company B

$\begin{array}{c} \mathrm{Total} \mathrm{current} \mathrm{assets}=\mathrm{Accounts} \mathrm{Receivables}+\mathrm{Cash}\\ =8+34\\ =\$42\end{array}$

Step 3 Company C

$$\begin{gathered} \mathbf{Total}\mathbf{ }\mathbf{Current}\mathbf{ }\mathbf{Assets}\mathbf{=}\mathbf{Cash}\mathbf{+}\mathbf{Merchandise}\mathbf{ }\mathbf{Inevntory}\mathbf{+}\mathbf{Accounts}\mathbf{ }\mathbf{Receivables} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{25}\mathbf{+}\mathbf{12}\mathbf{+}\mathbf{19} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{56} \end{gathered}$$